Originally the policies and powers of the European Community were not on the agenda of the 1996 Inter-Governmental Conference. However, the disappointment engendered by the absence of a reference to employment in the Treaty on European Union (1992) and the initiative to combat unemployment mounted by the Essen European Council (9 and 10 December 1994) prompted the Member States to prioritise these issues at the Intergovernmental Conference on the revision of the Treaty of Maastricht, in order to respond to what is one of their citizens' main concerns.

Following difficult negotiations due to the diversity of situations and national policies in the field of employment, a consensus finally emerged on the precedence of national policies and the rejection of large-scale spending programmes. The addition of a new chapter on employment in the Treaty establishing the European Community is the fruit of these negotiations.

A new objective for the European Union

Promoting employment is henceforth one of the objectives of the European Union and becomes a "matter of common concern" for the Member States (Article 2 of the EC Treaty). The new objective is to achieve "a high level of employment" without weakening the competitiveness of the European Union (Article 2 of the EU Treaty).

To achieve this objective a new power has been vested in the Union, supplementary to that of the Member States, concerning the preparation of a "coordinated strategy" for employment. The core of this strategy consists of common guidelines similar to those adopted at the Essen European Council.

The new Title VIII (Articles 125 to 130) of the EC Treaty spells out these objectives and how to achieve them. It also provides for the creation of an Employment Committee.

The Treaty's explicit reference to employment institutionalises the initiatives mounted by the Member States at different European Councils as well as those mounted by the Commission over the past two years. Moreover, alongside the provisions on Economic and Monetary Union, it redresses the balance by adding to the macroeconomic provisions a number of measures that meet European citizens' expectations as regards the struggle against unemployment. Indeed one of the hallmarks of this new Title is that repercussions on employment must be taken into account in adopting and implementing each Community policy and action.

Early implementation

At the Amsterdam Council of 16 and 17 June 1997 the Member States decided to apply the new provisions on employment in the Amsterdam Treaty ahead of schedule, and on 1 October the European Commission proposed guidelines for the Member States' employment policies in 1998.

BACKGROUND

During the Intergovernmental Conference on Economic and Monetary Union (1992), a debate took place on the advisability of including employment among the convergence criteria which Member States had to respect if they wanted to participate in the single currency. This idea was rejected by most governments, who were keen to guard their prerogatives in the field of employment policy. During the national debates in the run-up to the ratification of the Treaty on European Union, the absence of any reference to employment in the new Treaty came in for heavy criticism. It looked as if the European Union cared little about unemployment and jobs - at a time when the Member States were finding themselves compelled to make difficult social choices in order to reduce their deficits in preparation for future Economic and Monetary Union.

Preliminary steps - Essen

In 1994 the Essen European Council (9 and 10 December) adopted - for the first time at European level - short- and medium-term lines of action on employment. The summit's conclusions state that reducing unemployment is one of the priority tasks of the European Union and highlight the structural origins of much of European unemployment and the crucial role of meaningful dialogue between the social partners and policy-makers with a view to resolving this problem.

The European Council also defined five priority strands for Member States' employment policies:

promoting investment in vocational training so that workers can adapt to technological developments throughout their working life

increasing employment during periods of growth (notably via more flexible work organisation, a wage policy designed to encourage job-creating investments and the encouragement of initiatives at regional and local level)

improving the effectiveness of labour market policy by a better definition of measures to raise wages and by regularly evaluating the effectiveness of labour market policy instruments

improving measures to help groups which are particularly hard hit by unemployment, notably long-term unemployment (young people leaving school without qualifications, elderly workers and women).

These recommendations have been implemented in the Member States in the form of multi-annual programmes. Each year the Commission prepares a report on employment trends and policies in the Member States and evaluates them in the light of the priorities that have been adopted.

The Confidence Pact

In June 1996 the European Commission mounted an "Action for employment in Europe: a Confidence Pact" with a view to mobilising all the players concerned at Community, national and local level, capitalising on the potential multiplier effect of these actions at European level, and enshrining the struggle against unemployment in the framework of a medium and long term vision of society. The Dublin European Council (13-14 December 1996) welcomed this initiative embracing all the economic and social operators and called for swift implementation of the draft territorial employment pacts (80 of these pacts had been signed by June 1997).

The European Union has also taken numerous job-creation measures under the Structural Funds and the European Social Fund. By including employment in the Community policies and putting it on the agenda of all European Councils, the Treaty of Amsterdam allows the development of Community employment initiatives and the creation of a consistent policy at European level.

A NEW COMMUNITY POLICY

The new Title VIII puts in place a coordinated employment strategy designed to encourage a skilled and adaptable labour force and to promote labour markets that are responsive to economic change.

Common guidelines

Firstly the European Council adopts conclusions on the employment situation in the Community on the basis of the annual report prepared by the Council of the European Union and the Commission.

These conclusions enable the Commission to propose employment policy guidelines each year that are compatible with the major economic guidelines laid down under monetary union (Article 99, ex Article 103). The Council adopts the guidelines by qualified majority after consulting the European Parliament, the Economic and Social Committee, the Committee of the Regions and the Employment Committee. The procedure is modelled on the convergence arrangements for national economic policies. However, the common guidelines do not advocate measures to harmonise national provisions, though they do have an indirect impact on Member States' policy.

Member States must take these common objectives into account in their employment policies. The Council then examines the annual reports submitted by the Member States in this area and, if it deems necessary, addresses a recommendation - acting on a proposal from the Commission - to a Member State. This recommendation is then adopted by the Council by qualified majority.

This provision is similar to the one on economic policy, but no penalties are imposed on Member States that fail to comply with the Council's recommendations. Nor does the Treaty state that these recommendations have to be published.

Finally, in contrast to the provisions on economic and monetary union, Title VIII does not prescribe any macroeconomic objectives to be achieved, along the lines of the economic convergence criteria. Certain Member States did not want binding objectives enshrined in the Treaty. In their view, putting a coordinated strategy in place already amounted to a major step forward.

Incentive measures

The Council may adopt initiative measures to promote employment, acting by qualified majority and in accordance with the codecision procedure involving the European Parliament. These measures should "encourage cooperation between Member States and to support their action in the field of employment through initiatives aimed at developing exchanges of information and best practices, providing comparative analysis and advice as well as promoting innovative approaches and evaluating experience, in particular by recourse to pilot projects". They do not "include harmonisation of the laws and regulations of the Member States". However, the coordinated strategy on employment should have an indirect impact on these rules.

The initiative measures are fleshed out in two declarations:

the actions must specify the grounds for their adoption, their duration (maximum five years) and the maximum amount of funding

their funding is limited because it must be provided under Rubric 3 of the Financial Perspectives, which represents approximately 6% of the Community budget.

THE EMPLOYMENT COMMITTEE

A Committee on Employment and the Labour Market was established in December 1996. It has restricted powers. The new Article 130 of the EC Treaty replaces this Committee and requires the Council to establish an Employment Committee, on the lines of the Monetary Committee established by economic and monetary union.

This advisory committee promotes coordination between Member States on national employment and labour market policies. It monitors the development of these policies in the member states and the Community as a whole, formulates opinions either at the request of the Council or Commission or on its own initiative, and helps prepare the ground for the Council's proceedings.

Like the former Committee on Employment and the Labour Market, it consists of two representatives of each Member State and the Commission. It consults the social partners.